Canada: Claiming The Clergy Residence Deduction – CRA And The Courts Provide Further Guidance

Last Updated: March 9 2016
Article by Natasha Smith

Where an individual is determinably a member of the clergy, a regular minister of a religious denomination, or a member of a religious order, and is also employed in a qualifying function, he or she may take advantage of the clergy residence deduction (the "Deduction")  established under the Income Tax Act (Canada) (the "Act").  For the purposes of calculating income taxes owed, the Deduction provides the eligible taxpayer with a reduction in his or her total taxable income equal to the fair rental value of certain housing provided to, owned by or rented by the taxpayer, provided he or she meets the requisite status and function tests.

Recently released information technicals from the Canada Revenue Agency ("CRA") along with a recent decision of the Tax Court of Canada provide valuable guidance on who may claim the Deduction and under what specific circumstances the Deduction may be claimed.  Below is a summary of this guidance.

Dormitory as Principal Living Accommodation

Under the Act, provided a person meets the requisite status and function tests, they may deduct from their income, for the purpose of calculating their income taxes payable, the amount spent on rent and utilities paid for their principal place of residence or principal living accommodation ordinarily occupied during the year.

In the first of the two recent information technicals, CRA was asked to consider whether a dormitory room is a "principal place of residence" or "principal living accommodation" for the purposes of the Act and whether the fees paid for use of the dormitory room could be used to calculate the Deduction.  CRA concluded that while a dormitory does not meet the definition of a "place of residence", it does meet the definition of "living accommodation", provided the individual resides or lives in the dormitory and the dormitory includes access to shared facilities (i.e., bathroom, kitchen, etc.).  Whether a particular living accommodation is considered to be a person's "principal" living accommodation, however, is a question of fact.  To this end, CRA concluded that a living accommodation will be considered to be ordinarily occupied as a person's "principal" living accommodation if the individual "regularly lived, slept, received mail, etc.", at the accommodation.

As to whether the fees paid for use of a dormitory room could be considered "rent" for the purposes of calculating the Deduction, CRA relied upon the definition of the word "rent" as set out in the Concise Canadian Oxford and Black's Law dictionaries as well as Ontario's Residential Tenancies Act, 2006.  Accepting that "rent" constituted monetary consideration paid to another person for use of, or right to occupy, a rental unit, residential property, or similar premises for a period of time, CRA concluded that the fees paid for use of a dormitory room is considered rent for the purposes of the Act.

Eligibility of School Chaplain to Claim the Deduction

In the second recent information technical on this matter, CRA was asked to consider whether a school chaplain could claim the Deduction.  While CRA did not provide a definitive answer with respect to the particular taxpayer who was the subject of the inquiry, it did confirm how the job description of a school chaplain could be reviewed to determine whether a school chaplain meets the requisite status and function tests.  CRA confirmed that the status test will be easily met by a school chaplain if it is a condition of his/her employment that he/she be an ordained priest.  This requirement enables the chaplain to meet the status test undoubtedly as a member of the clergy.

Requiring more scrutiny, however, is whether a school chaplain meets the function test as this is a question of fact.  Under the Act, an individual may meet the function test if the individual is either: (a) employed exclusively in full-time administrative service; or (b) in charge of, or ministers to a diocese, parish or congregation.  Ruling out that the particular school chaplain in question was not employed exclusively in full-time administrative service, CRA went on to consider the factors that may indicate whether a school chaplain is ministering to a congregation.

First, CRA confirmed that the inclusion of certain teaching obligations in the employment duties of a school chaplain would not automatically lead to the conclusion that the school chaplain is not ministering to a congregation.  Importantly, however, ministering to a congregation must be an integral part of the school chaplain's overall duties.  Ministering to a congregation may include such tasks as leading weekday worship services, administering sacraments, presiding or assisting in other religious celebrations, and officiating weddings, services and funerals.  In determining whether ministering constitutes an "integral" part of a taxpayer's employment responsibilities, CRA stated that the following factors should be considered:

  • how often ministering is performed;
  • the amount of time spent ministering; and
  • the individual's ministering responsibilities relative to his or her overall job duties.

Second, because a group of students does not constitute a "congregation" for the purposes of the Act, a school chaplain will only be considered to be "ministering to a congregation" if attendance at chapel service is: (a) voluntary; and (b) not limited to individuals who are affiliated with the school.  To this end, CRA will consider whether students are required to attend chapel service as a condition of enrollment at the school, or to satisfy an academic requirement as well as whether attendance at chapel services is open to others in the community or the general public.

Provision of Chaplaincy Services through a Third Party

In Moerman v. R., 2015 TCC 295 ("Moerman"), the Tax Court of Canada was asked to consider whether an individual employed by a corporation contracted to provide chaplaincy services could claim the Deduction in respect of remuneration received from the corporation. 

In this case, the taxpayer served as the sole chaplain at two hospitals in Alberta (the "Hospitals") and he received remuneration for such services from two sources: (1) honorariums provided by Alberta Health Services ("AHS"); and (2) employment income from John Moerman Enterprises Ltd. ("JME") – a corporation owned by the taxpayer and his spouse.  The Minister had allowed the Deduction with respect to the honorariums received by the taxpayer from AHS but disallowed the Deduction with respect to income the taxpayer received from JME.

To the Court's satisfaction, the taxpayer explained to the Court that the funding for the chaplaincy program at the Hospitals was shared by AHS and College Drive Community Church ("College Drive").  In support of the chaplaincy program at the Hospitals, College Drive solicited and was provided with donations from both individual donors and churches in the city of Lethbridge.  AHS provided the honorariums to the taxpayer directly for his chaplaincy services and College Drive contracted with JME to render chaplaincy services at the Hospitals.  The taxpayer was then employed by JME to fulfil its obligations pursuant to its contract with College Drive.

After confirming that the taxpayer met the requisite status and function tests, the Court concluded that the taxpayer had the right to claim the Deduction in respect of income received from JME as it was clear that he had received remuneration from JME for his services as a chaplain at the Hospitals.  To this end, the Courts pointed to the following:

  1. the taxpayer did not render any ministering services to the Lethbridge churches nor to individual donors who provided funding to College Drive for the chaplaincy program;
  2. College Drive contracted with JME for the provision of chaplaincy services at the Hospitals;
  3. the taxpayer provided his chaplaincy services on a full-time basis at the Hospitals in satisfaction of the contract between JME and College Drive; and
  4. the taxpayer did not render any other services to JME, thus there was no other reason for the payment of remuneration by JME to the taxpayer.

This case confirms that notwithstanding who actually pays the remuneration, the remuneration can still derive from qualifying employment that renders the taxpayer eligible to claim the Deduction. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Natasha Smith
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.